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Friday, 11 December 2015

Chana settled down by -1.35% at 4736 as ample stocks position in the physical market on improved supplies following government measures weighed. Since imposition of the stock holding limits on pulses by the states, 1.3 lakh tonnes of pulses have been seized till December 2. As per data release by Agriculture Ministry, pulses planted on 100.4 lakh hac, lower by 7 per cent compared to last year acreage as on now. The acreage under chana reported higher in Maharashtra and Andhra Pradesh compared to last year’s acreage but lower in Rajasthan as per data released by respective state agriculture department. India has imported 3.07 lakh tonnes (lt) of Chana until September in the current financial year.

Trading Ideas: Chana trading range for the day is 4635-4881. Chana settled down as ample stocks position in the physical market on improved supplies following government measures weighed. Since imposition of the stock holding limits on pulses by the states, 1.3 lakh tonnes of pulses have been seized till December 2. As per data release by Agriculture Ministry, pulses planted on 100.4 lakh hac, lower by 7 per cent compared to last year acreage as on now. In Delhi spot market, chana gained by 16.65 rupee to end at 5166.65 rupee per 100 kgs.

Copper settled down -0.18% at 310.40 while the session was another muted session as investors positioned for a looming US rate hike. While slowly outlook improving as some bearish traders left the market after a major US copper producer cut supply. Copper prices may see support after the update that mining giant Glencore announced wider spending cuts as the commodities group races to cut debt and shore up its balance sheet. The Swiss-based company cut its capital expenditure for 2016 to $3.8 billion, from an earlier estimate of $5 billion. Glencore said last month it will cut 55,000 metric tons of copper output by the end of 2017, the latest in a string of supply cuts. In September, the firm said it would reduce copper production from mines in Zambia and the Democratic Republic of Congo by 400,000 tons.

Trading Ideas: Copper trading range for the day is 307.1-313.1. Copper dropped as demand from China wanes and as traders cut risk ahead of a U.S. Federal Reserve meeting next week. However downside was limited after mining giant Glencore announced wider spending cuts as the commodities group races to cut debt and shore up its balance sheet. Glencore said last month it will cut 55,000 metric tons of copper output by the end of 2017, the latest in a string of supply cuts.

OPEC pumped more oil in November than in any month since late 2008 and forecast little increase in demand for its crude next year, pointing to a larger supply surplus even as low prices hurt rival producers.

The Organization of the Petroleum Exporting Countries in a report also forecast supply from non-member countries will fall more sharply next year, which would suggest its strategy, reaffirmed last week of defending market share, is working.

OPEC's report follows an acrimonious OPEC meeting on Dec. 4, where it rolled over a policy of pumping crude to safeguard market share, despite oil prices that have more than halved to $40 a barrel in 18 months due to excess supply.

A year ago, Saudi Arabia pushed though an OPEC decision to defend market share instead of cutting output to support prices, hoping to slow growth in rival supplies such as U.S. shale oil.

"U.S. tight oil production, the main driver of non-OPEC supply growth, has been declining since April," OPEC said in the report. "This downward trend should accelerate in coming months given various factors, mainly low oil prices and lower drilling activities."

Supply outside OPEC is expected to decline by 380,000 barrels per day (bpd) in 2016, the report said, as output falls in regions such as the United States and former Soviet Union. Last month, OPEC predicted a drop of 130,000 bpd.

But OPEC also increased its 2015 non-OPEC supply growth forecast by 280,000 bpd, citing upward revisions to output from the United States, Brazil, Russia and the UK, among other countries.

Thursday, 10 December 2015

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The slump in oil prices to levels not seen since the global financial crisis has fanned expectations of deflation, hammered economies of producers and flattened share prices of once high-flying energy companies.

But according to one analyst, lower oil prices could actually help some emerging market economies and refiners by lifting disposable incomes and improving margins. "Cheaper feedstock costs will support refining margins, while lower import costs will encourage greater consumer spending, driving economic growth in the emerging economies," said Peter Lee, Oil & Gas Analyst at BMI Research on Tuesday.

US WTI and Brent crude oil prices are trading around seven-year lows, tanking after OPEC last week decided not to cut its 30-million-barrel a day production ceiling to support depressed energy prices. Major producers of refined fuels in Asia include South Korea, Singapore, Japan and Taiwan that rely on crude oil imports to supply the sector.

"Regional demand for oil products at the higher-end of the barrel, notably gasoline and naphtha, remains strong, providing opportunities for refiners to capitalize on higher margin products," said BMI's Lee.

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Wednesday, 9 December 2015

Crude prices rose on Wednesday as Japan posted stronger than expected machinery orders and China announced an easing of some import taxes, lending the market at least temporary support in an environment of general oversupply.

U.S. crude futures were at $38.08 per barrel at 0209 GMT, up 57 cents from their last settlement. Internationally traded Brent futures were up around half a dollar at $40.74 a barrel.

Traders said the recovery on Wednesday was largely a result of short covering, a surprise lift in Japanese machinery orders and Chinese tax reforms aimed at encouraging imports of advanced equipment, energy raw materials, and key assembly components.

Yet analysts said there remained a plethora of bearish factors that have helped pull down commodity prices since 2014, including the strong dollar, weakening global demand, soaring supplies and the unwinding of a quantitative easing (QE) premium with the U.S. Federal Reserve expected to hike rates soon.

"Whatever the case, a CRB index hovering around 13-year lows and oil prices close to seven-year troughs suggest that commodity producers in general are doing it tough," ANZ bank said, referring to the Thomson Reuters Core Commodity CRB Index falling below 178 points for the first time since 2003.

Gold clung to small overnight gains on Wednesday, supported by softness in the dollar, but the metal's upside was limited as investors anticipated a Federal Reserve rate hike next week.

FUNDAMENTALS

* Spot gold was little changed at $1,075.20 an ounce by 0042 GMT, after rising 0.4 percent on Tuesday as the dollar slid against a basket of major currencies. The metal is less than $30 away from a near-six-year low reached last week.

* Bullion traders are not optimistic of a sustained rally in prices as the Fed is widely expected to raise U.S. rates for the first time in nearly a decade at its next policy meet on Dec. 15-16.

* Higher rates are expected to dent demand for non-interest-paying gold, which has already lost 9 percent of its value this year in anticipation of the rate hike.

* A slide in commodity prices, particularly crude oil, is also weighing on gold. Crude has fallen to its lowest in nearly seven years as OPEC continues to pump near-record amounts of oil to defend market share. [O/R]

* Weakness in oil could trigger fears of deflation, a bearish factor for gold, which is often used as a hedge against oil-led inflation.

* The currencies of major commodity producers such as Australia and Canada nursed hefty losses early on Wednesday after suffering big falls in the past two days from a selloff in oil and bulk commodities.

Tuesday, 8 December 2015

Gold struggled to recover from overnight losses on Tuesday on expectations of a Federal Reserve rate hike next week and a robust dollar.

FUNDAMENTALS

* Spot gold was little changed at $1,071.52 an ounce by 0009 GMT. It fell as much as 1.6 percent on Monday to hit a session low of $1,069.66.

* Friday's strong U.S. nonfarm payrolls data supported widely held market views that the Fed would hike interest rates for the first time in nearly a decade later this month.

* Gold gained 2.3 percent on Friday on short-covering immediately after the data, but with the focus back on the rate rise next week, investors sold off the metal on Monday.

* The dollar extended gains against a basket of major currencies on Monday, helped by the jobs data and the looming rate hike, further weighing on bullion.

* Higher rates tend to drag on non-interest-paying gold by increasing the opportunity cost of holding it, while boosting the dollar.

* Bullion has lost about 9.5 percent for the year, its third straight annual decline, on expectations of the rate hike.

* Investor sentiment has been downbeat. Assets in SPDR Gold Trust <GLD>, the world's largest gold-backed exchange-traded fund, tumbled 0.65 percent to 634.63 tonnes on Monday, the lowest since September 2008.

MARKET NEWS

* Oil prices skidded to their lowest level in nearly seven years on Monday as a global glut showed no signs of abating. Stock markets fell.

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US oil prices finished at their lowest level since February 2009 in New York trade as markets continue to reel from OPEC's refusal last week to cut back production.

The January contract for West Texas Intermediate crude sank USD 2.32 to USD 37.65 a barrel on the New York Mercantile Exchange, a drop of 5.8 percent. In late-afternoon trade in London today, Brent North Sea crude also was languishing near 2009 lows.

The Organisation of the Petroleum Exporting Countries - which pumps about 40 percent of the world's crude oil - decided on Friday against cutting output to raise prices. The 13-member OPEC cartel took no action to shore up the market and observers said it appeared to be in disarray.

"The decision by OPEC members to keep oil production output at record high levels has seen oil prices plummet again," said Sanjiv Shah, chief investment officer of Sun Global Investments.

Monday, 7 December 2015

Soyabean settled down -0.34% at 3770 on weak demand for Indian soymeal in export market. India soymeal exports in the month of December plunged 91.95% from a year earlier on higher prices of the soybean in the local market, data released from Solvent Extractors Association of India (SEA) showed. Soybean oilmeal exports dropped to 8,909 tons in November compared to 110,806 tons for the corresponding period a year earlier, data from SEA of India showed.

Meanwhile, export of soybean meal is at a historical low during current year and reported 55,889 tons during the first eight months of the financial year 2015-16 compared to 250,904 tons in the previous year. Prices were also down on weak demand after USDA weekly export sales reported fall in net sales for 2015-16 by 35% to 1.17 million tons on week and 18% fall from 4-week average. India soymeal exports in the month of October dropped 85.42% from a year earlier on higher prices of the soybean in the local market, data released from Solvent Extractors Association of India (SEA) showed.

Trading Ideas: Soyabean trading range for the day is 3708-3844. Soyabean prices ended with losses on weak demand for Indian soymeal in export market. India soymeal exports in the month of December plunged 91.95% from a year earlier on higher prices of the soybean in the local market. NCDEX accredited warehouses soyabean stocks gained by 3212 tonnes to 48419 tonnes. At the Indore spot market in top producer MP, soybean dropped -42 rupee to 3701 rupee per 100 kgs.

Zinc settled up 0.98% at 103.15 after a report showed U.S. employers added more jobs than forecast in November, boosting demand prospects. The rise in payrolls followed a gain a month earlier that was bigger than previously estimated, while the jobless rate held at a seven-year low, a government report showed. Even before Friday's release, data indicated that the U.S. labor market added more than 200,000 monthly jobs on average this year.

The unemployment rate in November held steady at 5.0%, while average hourly earnings ticked up by 0.2%. Combined zinc inventories in Shanghai, Tianjin and Guangdong added 10,300 to 323,800 tonnes this past week. Tianjin’s zinc inventories fell only slightly. Shanghai saw zinc inventories grow on large inflows of imported zinc and normal supplies from zinc smelters.

Trading Ideas: Zinc trading range for the day is 100.9-105.5. Zinc settled up after a report showed U.S. employers added more jobs than forecast in November, boosting demand prospects. The rise in payrolls followed a gain a month earlier that was bigger than previously estimated, while the jobless rate held at a seven-year low. Zinc weekly stocks at Shanghai exchange came down by 519 tonnes.

Crude oil slid nearly 3 percent on Friday, as Organization of Petroleum Exporting Countries (OPEC) refused to cut production levels despite an ongoing supply glut that has pressed down mightily on prices. And at this point, traders don't appear to see crude oil rising back above USD 50 per barrel any time soon. With the most widely traded Brent crude contract trading just above USD 40, the first futures contract that shows oil above USD 50 expires in the second half of 2017.

Crude oil for December 2017 delivery (which is more liquid than other far-in-the-future contracts) is trading at just USD 51 per barrel. Futures contracts don't reflect pure expectations of where that commodity will trade; they also reflect things like the costs of storing that commodity, the extra price that users will pay to have access to the commodity for convenience reasons, and prevailing interest rates.

Yet the crude oil futures curve clearly reflects expectations that the commodity's plunge below USD 50 is not a short-term phenomenon. "The futures curve is telling you that the market is totally oversupplied, and will remain so for a long time," commented Andy Hecht, a commodities trader and the author of How to Make Money with Commodities. The latest bad news for crude came on Friday, when the OPEC decided to take a "wait and watch" approach to production levels, rather than taking action as oil prices continue to plummet.

That spelled bad news for oil bulls who may have been hoping the oil cartel might signal a policy shift.